Calling all small business owners without an accounting background! Check out these bookkeeping tips to save time and improve your procedures.
Invest in the Right Tools
Industry-specific software is everywhere. While you can get by without it, and you definitely don’t need everything that’s on the market, it probably pays to digitize some procedures.
You don’t need to go out and buy iPads and contract software; carbon copy agreements are still great! But if inventory is such a hassle that you never count it, implementing inventory management software could benefit your company.
Invest in a good scanner that can handle some volume. Paper doesn’t have to be eliminated, but scanning records into a digital filing system is often a more secure and efficient system.
If you have the scanner, a digital filing system can be a great benefit to companies with storage rooms full of file banker boxes and filing cabinets, saving space and increasing accessibility. Mirror it after your current paper filing system to keep it straight in your head. Add digital security, recurring backups, and cloud access to improve your operations.
Separate business and personal expenses
The IRS won’t let you deduct your personal expenses. If they catch you they’ll throw them out, assessing additional tax, interest, and penalties. Accountants can help remove those personal transactions from your books, but the best advise is to separate your accounts so they don’t get in there in the first place.
Set up separate bank, credit card, and investment accounts for your business as well as you personally. Set up a system so you don’t grab the wrong card at the store; for example, some put their personal cards on the left side of their wallet, and business on the right.
Proper bookkeeping is all about completeness and accuracy. Every transaction must be recorded exactly as it happened. Don’t take shortcuts thinking you know what the ending balance should be.
Software automation can help with both, but remember that junk in = junk out. Therefore, nail down your setup of new employees, clients, and vendors with internal controls. Don’t allow critical fields be left blank or new entries to be skipped entirely. When using sales or accounting software, make sure to tie transactions back to clients and vendors whenever possible. Avoid using ‘Other’ or ‘Miscellaneous’ categories. Establish three-way-match controls, where invoice, purchase order, and receipt all tie to each other.
Pay yourself a salary
All small business owners want to make money. Depending on your business entity type, there are different methods to get money out of your company. Educate yourself on all of these options so you’re not left in the dark.
Many small businesses are S-Corps, and S-Corp owners should know they need to take a reasonable wage. Simplify your payroll and bookkeeping by establishing a reasonable wage for yourself. An S-Corp owner that takes distributions without taking a salary is sure to draw the attention of the IRS.
Put bookkeeping time on your calendar
Most people procrastinate when it comes to bookkeeping. Bookkeeping tips help, but there’s still work to do. Hold yourself accountable by setting a recurring time on your calendar to sit down, uninterrupted, with your numbers.
Letting data entry and accounting tasks pile up is a recipe for disaster. What happens when you’re months behind on financials but need an emergency bank loan that week? How about when you get so busy filing your sales tax return slips your mind? Or when a customer complains, and you can’t find their past records and receipts to verify if they’re correct?
There are a million different things that can come up in the day-to-day operations of a small business, and failing to have the financial history of your company up to date will hurt you.
Hire a professional
Perhaps you don’t have enough time. Perhaps you don’t have the expertise. Whatever your concern, there are professionals available to help.
Industry-specific consultants are great at analyzing your current operations, adding their insights, and helping you implement impactful changes.
Certified professional accountants are great at taking the work off your plate, offering expertise, and helping you improve your company’s books.
Working with Haworth & Company, Ltd.
If these bookkeeping tips don’t solve your problems, Haworth & Company may be the solution. As a specialized small business accounting firm with over 30 years of experience in the Twin Cities and Rochester, MN, our monthly bookkeeping program has been helping small businesses like yours for decades. We’ll help you get organized, set up proven systems, and compile accurate financial statements each month, as well as maintain general ledger records so you can drill down and look up any transaction you need. We’ll help you balance your checkbook, maintain your list of outstanding checks, and more. Check out our bookkeeping services page for more info and contact us when you’re ready to get started!